Winona reviews Hardee's block development

(3/5/2018)

by CHRIS ROGERS

Fastenal founder Bob Kierlin’s proposal for a $25-million development on the city-of-Winona-owned Hardee’s block is advancing. Last week, the Winona Planning Commission supported the concept with some critiques, and city staff explained their plan for terminating a parking lease with the Winona County Historical Society and relocating leased parking for the Winona County Government Center.

On February 15, the city of Winona’s Port Authority Commission voted to pursue a deal to sell the Hardee’s block to Kierlin’s newly formed company, Main Square Development, LLC, and his family’s foundation, the Hiawatha Education Foundation. On February 20, Kierlin announced the details of the project: constructing a U-shaped building that would hold 60 apartment units and 10,000 square feet of commercial space with underground parking and possibly another 30 apartments in the future. A 5,000-6,000-square foot Montessori preschool would be built on the block’s northwest corner.

Main Square Development has offered the city $1.9 million for the land. That purchase offer comes close to matching the city’s $1,975,000 investment in the site so far. The city would also be responsible for paying for environmental cleanup of the site. A cost estimate for that work has not yet been released, but state grants may defray the expense. The Main Square Development is not asking for any other government assistance. Before voting to sell the land, city officials plan to hold a public hearing at the Port Authority Commission’s meeting on Thursday, March 8, at 4 p.m. in the council chambers at city hall.

At Monday’s Planning Commission meeting, Peter Schwab of the contracting firm Schwab, LLC, offered some new details. The apartment buildings would feature balconies, a fitness center, and a rooftop gathering space, he said. As previously reported, there would be around 97 underground parking spaces beneath the apartments and commercial building; however, Schwab explained that the underground parking will not be entirely underground. Because of high water levels, Schwab said the basement level would not be completely below grade. Instead, the parking level would be halfway underground, halfway aboveground, with the first floor situated around four feet above the sidewalk. “So there will be some architectural challenges there to make that look appropriately nice,” he said of the above-grade first floor.

Planning Commission member Peter Shortridge is the managing partner behind recent downtown development projects — the Latsch Building and the forthcoming 102 Walnut project — and he is one of the most vocal proponents of the city’s aesthetic rules for downtown development. Last year, the city passed a raft of rules — sometimes called form-based standards — aimed at making sure new construction and downtown renovations look nice. Shortridge pointed to a rule that was in both the old code and the new one: the first floor of downtown buildings facing the street must be commercial, not residential. Under the city’s rules, the rear of a building’s first floor may be apartments and the upper floors may be residential, but the first floor facades must be commercial. The idea is to create a downtown full of storefronts that are stores and offices, not apartments. Schwab said that Main Square Development plans on applying for a variance — an exception — to that rule.

Referring to Main and Fourth streets and Main and Fifth streets, Shortridge asked Schwab, “So, I’m curious. Are you going to be coming back for a major variance right out of the gate to eviscerate the form-based standards on those two corners? Because those are pretty important corners.”

“Probably,” Schwab responded. He explained that while the demand for apartments is strong, filling commercial space downtown — especially at higher price points — is hard. If the first 10,000 square feet of commercial space fill up quickly, maybe more of the Fourth Street side could be commercial, too, but right now, the demand for high-end commercial space in downtown is pretty limited, Schwab said.

“That’s a pretty major variance you’re talking about there,” Shortridge stated. “You’re talking about a variance for the whole block.”

“It’s not just under the new code. As long as I’ve been on the commission, we’ve required the majority of the front of a building downtown to be commercial,” said longtime Planning Commission member Craig Porter. “I agree that that might be a bit of a stretch, when we get to the site plan phase, that you want a variance [to provide] half or a third of the amount of commercial space we normally require,” he added. Porter and Shortridge suggested ideas for how the building could follow the rule.

If the city waives the commercial storefront requirement for this project, 60 Main Street developer Sherman Associates is going to expect the same treatment, Shortridge stated. “I’m going to vote for it, don’t get me wrong … but the fact of having money does not mean you get to get around the rules and the standards,” he said.

City staff defended the project. “Significant projects like this in a downtown area — you can expect a variance or two when you come in with a project like this,” city planner Carlos Espinosa said. “Sometimes, the benefits of a development and the overall mix of uses provides a good argument for a variance in some cases,” he added.

Planning Commission member Dale Boettcher also urged his colleagues to look at the long-term benefits to downtown Winona from an investment of this size. “That’s not been made in 70, 80, 90 years,” he said. This is what the future of downtown Winona needs, Boettcher added.

Economic Development Director Lucy McMartin reminded the Planning Commission members twice that they were only being asked to weigh in on whether the general development concept fits in with the city’s comprehensive plan. The Planning Commission was not asked to share its opinion on future approvals the development would need.

The Main Square project does closely match the comprehensive plan’s vision for the Hardee’s block. The 2007 Downtown Revitalization Plan calls for mixed-use buildings to be built on the Hardee’s block, with an interior courtyard of shared parking spaces. “The recently vacated Chrysler Building and surrounding block offer opportunities for office or studio and residential uses,” the plan states. The plan essentially calls for exactly what Kierlin is proposing, Espinosa said.

The comprehensive plan and Downtown Revitalization Plan also speak to the importance of aesthetic rules and lay out a vision for an arts and culture district surrounding the Historic Masonic Temple Theatre, Shortridge noted. The city has invested around $2.4 million so far in making the Masonic Temple a destination venue. Where will theater patrons park, Shortridge asked. “There was a lot of talk initially when this was going to be a request-for-proposals-type development that there would be some parking that would be available to this whole arts district,” Shortridge stated, referring to the city using a competitive process to select a developer for the Hardee’s block and making the inclusion of public parking an important criteria. “I appreciate in your documents, you mentioned the arts district a number of times in your presentation, but we sure didn’t get any parking for it,” Shortridge told Schwab. He continued, “[This development] creates even more of an issue for where that parking will be able to happen.”

Despite some concerns, the Planning Commission voted unanimously that the proposal was in-line with the comprehensive plan. “It’s a great project. I am so excited to see this,” Shortridge stated. “I am saddened by the tax revenue loss to the school, but I think it’ll be than offset by the number of people having a pre-school downtown [will bring] and what that will stimulate and stir. It’s worth the tradeoff there.” Planning Commission member Todd Paddock said he really appreciated the inclusion of the preschool and early childhood education facility. “There is a very, very strong need for it,” he stated. “I agree with Peter. It’s a great project for downtown, just make it palatable,” Porter stated.

It is still very early in the design process, and details may be changed, Schwab said. “This is good feedback,” he told the Planning Commission.

City to terminate, relocate parking leases

For the last several years, the city has leased parking spaces on the Hardee’s block to Winona County and the Winona County Historical Society (WCHS) for the use of employees and visitors at the Winona County Government Center and Winona County History Center, respectively. If the Main Square Community project is built, county and WCHS employees will have to park somewhere else.

The city signed a 30-year lease with Winona County in 2007, so the city is still obligated to provide the county with 24 parking spaces for another 19 years, McMartin explained in an interview. McMartin explained that the city always expected to redevelop the Hardee’s block at some point, so the lease allows the city to provide those 24 spaces anywhere within a two-block radius. City manager Steve Sarvi has said the city will fulfill the lease requirements.

How will the city do that? McMartin explained the city will either dedicate spaces at nearby, existing city-owned parking lots, or it could create new parking. There are several existing city-owned parking lots within a two-block radius: municipal lots 15 and 16 across from Wesley United Methodist Church, lot 14 at Center and Fifth streets, and lots three and two near Center and Third streets. The city could dedicate 24 spaces for county employees at any of these existing lots.

Alternatively, the city could create a new parking lot within a two-block radius. Asked where that would be possible, McMartin said, “I think it’s too early to talk about that. We’re looking at other areas for potential parking in the future if we need it.” Would creating new parking involve purchasing and demolishing a building or buildings? “We’re in the very initial discussions of what options are available,” McMartin responded.

There is also a third option. Winona County could decide that it does not need any parking from the city or that it needs less parking than the 24-space agreement provides. “Otherwise, we’d be obligated to provide 24 stalls within two blocks,” McMartin stated. McMartin plans to meet with county staff to discuss the agreement.

The city does not have the same obligation to the WCHS. That lease allows the city to terminate the lease with a 60-day notice, and on Thursday, McMartin will ask the Port Authority Commission to terminate the lease.

WCHS Executive Director Mark Peterson, who is also the mayor of Winona, said that a few years ago, a donor helped the historical society acquire two neighboring properties — 120 and 118 West Fourth Street — and that the WCHS intends to demolish the buildings and construct a replacement parking lot there.

“We certainly enjoyed having that designated parking for the past eight years,” Peterson said when asked if losing its lease with the city was a concern for the WCHS. “I’d be a lot more concerned about it if it weren’t for the fact that we do own some adjoining property that we hope to build a parking lot on. It’d be a lot smaller. It’d be about half the size of what we have now, but at least it offers us some alternative to losing all our parking.” Peterson added, “We knew the long-term prospect for that block was development.”

Peterson said he does not believe the buildings the WCHS intends to demolish are of historical value. One is in very poor repair, he stated.

The Port Authority Commission will discuss these leases and hold a public hearing on the sale of the Hardee’s block this Thursday, March 8, at 4 p.m. in the council chambers at city hall. This meeting is open to the public.